Diamonds regain their lost lustre

Diamonds are "the ultimate luxury good", says Garry White in The Daily Telegraph. So it's no wonder demand plunged when the global recession struck. Polished diamond prices fell by a third as world retail diamond sales fell by a similar amount. Rough diamond prices slid 65% in the six months to March.

But the market now seems to have hit bottom. According to De Beers, the largest rough-diamond producer, demand is rebounding; Rio Tinto has felt confident enough to raise prices recently.

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For now, however, "it is America that counts", because it consumes around half of the world's polished diamonds, says Idexonline.com. Until the US market "heats up", it's hard to see much of a "catalyst" for higher prices.

What's more it's likely to take US consumers some time to get back to their spending ways given their scant savings and heavy debt loads. So the likes of Petra Diamonds (AIM: PDL) look worth tucking away, but may not tick up much for some time.

Gold watch

The dollar is "the main driver fuelling the run in commodities", says MF Global's Edward Meir. So it's no wonder gold has stayed near last week's record above $1,070 an ounce. Jewellery buyers entering the market on dips are also helping gold to establish a new, higher trading range.

Only higher interest rates can prop up the dollar, and they won't come soon, says Leonard Kaplan of Prospector Asset Management. Meanwhile, oil's renewed uptick also points to inflation and is thus good news for gold.

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.